First it was Citi, then SocGen, now a third key investor has decided to pull their money from SAC – the once vaunted hedge fund which now everyone is now avoiding like the plague, and for which the only question now is “when” – when will Stevie close down shop, and will this happen before or after the paddywagons finally arrive at 72 Cummings Point road.
The WSJ reports: “Titan Advisors LLC recently told clients that it had decided to withdraw its entire investment from SAC, said clients who received phone calls from Titan. “They’ve told us they still think SAC is a good firm but Titan doesn’t need the headline risk, and we sure don’t,” said Tom Taneyhill, executive director of the Fire & Police Employees’ Retirement System of the City of Baltimore, on Friday. Société Générale SA, which has client money in SAC through its Lyxor asset-management arm, also decided to pull its money from SAC, The Wall Street Journal reported earlier this month. At the time, an SAC spokesman declined to comment. Titan’s departure is significant given SAC’s long-standing relationship with one of Titan’s founders. Titan co-founder George Fox began investing in SAC in the mid-90s, several years after Mr. Cohen started what became the firm in 1992.”
And while an avalanche of outside money is now being pulled out of SAC with breathtaking speed, one man – the person who made the abysmal sequel to Wall Street almost singlehandedly possible – Anthony Scaramucci, and whose livelihood depends on the credibility of SAC, continues to think Cohen is “not one of the rogues.” We’ll see how long this particular fund of funds lasts once its owner’s naive posturing, too, is proven wrong.
In the meantime the noose continues to tighten:
The insider-trading indictment of ex-SAC Capital Advisors LP portfolio manager Mathew Martoma sets in motion a criminal trial process that puts new pressure on him to cooperate with the government’s investigation of the hedge- fund firm founded by billionaire Steven A. Cohen.
“It’s another step on the government’s march into Cohen’s office,” Erik Gordon, a professor at the University of Michigan Law School and Ross School of Business, said in an e-mail after the indictment. “Given the prosecutors’ success in getting convictions and serious jail sentences, it’s time for anyone at SAC who is connected with insider trading to start having nightmares.”
So… all of them?
The bigger question is how much stock volume will remain once SAC is shut down, in a market already best known for ridiculously low volume – but at least one having “liquidity” courtesy of the same HFTs that bring you nightly ES flash crashes possible. And how much in “soft dollar”-based commission will Wall Street’s already desperate for revenue Sales teams lose once the firm responsible for 5-10% of daily NYSE volume is gone.